What is QT? During the crisis, a lot of bad loans were made and a lot of risky bonds got issued. When the market had its Minsky moment in 2008, everybody simultaneously realized they had too many risky assets and needed to adjust portfolios. When everyone tried to sell at once, prices overcorrected. Worse, there was the risk of a debt-deflation spiral, where the financial crisis tanks the economy, making even more mortgages and bonds unsound, in turn further worsening the crisis and tanking the economy.

Driving base rates to zero seemed inadequate to the task of restoring equilibrium. So the Fed stepped in with quantitative easing: buying the securities no one else wanted to own, taking toxic assets off of private sector balance sheets onto its own balance sheet. Effectively out of the system.

Now that the Fed has stopped doing QE, every day the portfolio on the balance sheet shortens by a day, and some of it rolls off of the short end.

When a bond on the Fed’s balance sheet matures, it’s (sort of) the reverse of QE, so some people call it quantitative tightening. (A more exact opposite of QE would be selling long-term securities into the market.) The maturity is a forced sale of an overnight obligation. The maturing bond used to be a long-term instrument, but now it has rolled down the yield curve so it’s short-term. The Fed gets cash, the bond obligation is canceled.

It’s a little like when a bond matures in your brokerage account, broker calls and ask what you want to do.

Maybe you say, roll it into a T-bill or money market fund, which is the most neutral thing to do.

Technically, when the bond matured, it changed your positioning.

But the maturity didn’t constrain your position at any time, you could offset it any way you wanted, you could sell it, swap it. Rolling into another short-term position would be the most neutral action.

It’s the same for the Fed. In the Fed’s case the maturity drained liquidity. The market lost a cash asset when it paid off the bond, and lost a corresponding cash obligation when the bond was paid off.

The maturity reduces the Fed’s balance sheet. But doesn’t constrain monetary policy in any way. The Fed pegs base rates like Fed Funds. Every day it can add or drain liquidity to keep short rates close to target.

So, to sum up: QT is like a scheduled sale of a short-term security.

And short rates are pegged.

So QT doesn’t affect short rates. The Fed will do whatever is necessary to maintain the peg, including adding liquidity to offset any drain from QT.

Monetary policy affects the market and the economy through interest rates, which tell you everything you need to know about liquidity and expectations. How else would it work? If it’s not impacting rates, it’s not impacting policy, the economy, the stock market.

So why are people hand-wringing about QT? It’s nonsense. Voodoo economics.

What do QT hand-wringers want the Fed to do, not let the drain happen at the short end of the curve? Indeed, the Fed doesn’t necessarily drain, because they peg the short end of the curve. They will end up buying back whatever is needed to maintain the peg, adding liquidity.

And there are $1.5t in excess reserves, and via interest on excess reserves, any bank can increase or reduce deposits to the Fed at a fixed rate. If the Fed does nothing to offset the drain when a bond matures, all that happens is excess reserves get drawn down. (Bank customer who issued the bond instructs the bank to pay the Fed. Bank instructs the Fed to debit their excess reserve account at the Fed. Deposits go down, excess reserves go down.)

A (partially valid2) criticism of QE was that if the Fed adds liquidity, but people just park it back at the Fed in the form of excess reserves, it doesn’t impact the real economy. The same applies when the process is reversed. If the Fed drains liquidity, but people just draw down their excess reserves, it doesn’t impact the real economy.

Do QT hand-wringers want the Fed to buy at the long end? That’s ridiculous, the yield curve is flat. It would be nutty to be tightening and simultaneously doing QE.

Do the QT hand-wringers think Fed tightened too much and should ease? There they may have a point, but that has absolutely nothing to do with balance sheet reduction and QT per se.

The Fed statement responding to market concerns about the balance sheet reduction and QT seemed a little like telling the market ‘oh yes dear, anything you say’ but just doing same thing they’ve been doing all along.

It seems like some board members thought they had to say something but there’s nothing to say, so they’re like ‘ok fine whatever’.

I think Timaraos in WSJ and Duy on Bloomberg are on the money. There are always talking heads blaming something for market gyrations. If it’s not QT, then it’s ETFs, risk parity, algos. It’s just mumbo jumbo to explain movements that are pretty stochastic. And QT is not really a thing, except to the extent that a technical side effect of policy normalization is balance sheet reduction.

The worst part is, a lot of the QT hand-wringers are free market fetishists who were probably complaining about QE in the first place. They sure seem to think the market is pretty effing fragile… OMG QE! OMG QT! Algos! Risk parity! ETFs! They are are messing with the function of the free market! If the market has a cow and can’t deal with this crap and has a crisis every 10 years, maybe it’s not all it’s cracked up to be.

I believe in complementarity, the idea that you can’t necessarily have one deep consistent model of reality, possibly the best you can do is many shallow models that are applicable in overlapping circumstances.

But it’s still pretty impressive that markets work as well as they do most of the time, when so many people are mostly applying simplistic heuristics that don’t reflect underlying reality.

I could write a series a la Penn Jillette’s “Bullshit!” and go all Lewis Black/Andy Rooney on why easing does not cause deflation, there is no such thing as a chronic safe asset shortage, and MMT is not really a new thing.

But I won’t. Just stay off my lawn!

1Suppose the bond that matures is a 10-year, and the issuer floats a new 10-year. If you have a lot of new issuance, that would pressure long rates. Hence the policy of allowing at most $50b per month to mature without replacing it at the long end.

2QE pushed rates down at the long end. By pegging overnight rates at 0, committing to keeping them at 0 for an extended period, and buying at the long end, the Fed was pushing ZIRP down the yield curve. QT doesn’t directly impact rates at the long end, although maturing bonds maybe be refunded with new issuance. Given that the yield curve is flat, and credit spreads pretty normal, seems like no big deal.

3 most similar accounts, using topic analysis of what they post about, who they share same URLs as, who they follow and are followed by. P.S. I LOVE THIS FEATURE!

Each user’s most frequently shared domains, hashtag, tickers, other FinTwitterers they mention

Who they follow/are followed by (roll over ‘followed by’/’followed’)

I hope this helps everyone find great new FinTwit BFFs to follow.

It’s always a bit arbitrary, where to cut off people who aren’t relevant. Some people may find the influential tech or political accounts a bore, but I try to find a balance.

The biggest problem is churn. There are some people who are highly followed who don’t really post relevant stuff any more. There are people who are pretty relevant but it takes a very long time to break through and get influential. I could expand the panel, but the more you expand it the more the common denominator is… all Trump all the time.

Then, I guess I could use topic analysis to try to downvote Trump and politics… use noise cancellation to determine what is popular out in the broad population and penalize it … but it’s turtles all the way down the rabbit hole.

Wall Street never changes, the pockets change, the suckers change, the stocks change, but Wall Street never changes, because human nature never changes. – Jesse Livermore

Confidence men are hardly criminals in the usual sense of the word, for they prosper through a superb knowledge of human nature; they are set apart from those who employ the machine-gun, the blackjack, or the acetylene torch. – David Maurer

We can add David Maurer’s 1940 The Big Con. It’s an incredibly rich sociological and linguistic study of the underworld of grifters and marks in their heyday, and the basis for the all-time great movie The Sting.

Wall Street is the land of castles in the air. Every few years, you get a con job seemingly as brazen as The Sting: John Law, Gregor MacGregor, Charles Ponzi, Ivar Kreuger, Tino De Angelis, Eddie Antar, Bre-X, Barry Minkow, Jordan Belfort, Bernie Madoff, Sam Israel, Allen Stanford, the list goes on. And those are just the big ones; small-time schemes and vanilla accounting scandals are a dime a dozen.

Let’s review the elements of the big con as exemplified by The Sting, and see if it teaches us how to avoid becoming victims. 1

The Mark:

Every con needs marks, of which there is no short supply. The keys to being a good mark are overconfidence and greed.

You think you are a better judge of investments and people than most. You think you deserve something for nothing.

You put unwarranted trust in people who look and act the part (authority, social proof), who like you and flatter you (liking).

You may be pretty clever, but you think you are a little more clever than everyone else. Perhaps not perfectly honest and amenable to a little chicanery, willing to cut a corner to make a buck.

Religion can make people more vulnerable. You believe the supernatural holy man or psychic, you think God has granted you this heaven-sent opportunity. Faith can go hand-in-hand with trust of authority, affinity scams. You think you are more deserving than the wicked, an instrument of vengeance against the evil casino, bookmaker, or Rothschild conspiracy.

Lack of self-awareness and ability to give in to strongly motivated reasoning makes you more vulnerable. When you really need the money, when you had a life-changing event that causes you to not think clearly, that helps.

Marks are typically older, typically men. A high status bumpkin, maybe. But no one has a monopoly. Maybe a salaryman with a gambling problem, who thinks he deserves the good life more than his bosses. Maybe a woman with too much faith in the good in people and her intuition about them.

Brains don’t immunize you. Marks con themselves. The smarter you are, the more ability you have to conceive a complex narrative and make yourself believe it. The more confidence in your understanding of the world and attachment to the positive outcome (greed), the more vulnerability to exploitation.

“There’s a mark born every minute, and five to trim him and five to knock him.” Knock, meaning try to warn him. Usually unsuccessfully, because you can’t knock a good mark. Marks have gone to court to defend the con artist who has taken their money, say he was set up, innocently vilified, the authorities messed up a good thing.

The Grifters:

The stars of the show are the roper and the inside man.

The roper locates and researches well-to-do victims. (Puts the mark up.) The roper gains the victim’s initial confidence and passes him to the inside man for a percentage. (think, the sketchy broker and the fraudulent CEO).

Good con men have elements of the dark triad: narcissism, psychopathy, Machiavellianism. (Via Maria Konnikova’s The Confidence Game, a thorough study of the psychological elements of the con.)

Narcissism: Grifters get off on putting one over on everyone, showing they are superior and everyone else is a mark.

Psychopathy: Inability to feel empathy for the marks. But a con man needs enough empathy to get inside the mark’s head, to relate, and to fake it.

Above all, Machiavellianism: It’s a dog eat dog world and it’s just being realistic that everyone is doing their best to fleece everyone else. People just play the hand they were dealt as best they can to survive. Don’t hate the player, hate the game. Never mind that they are playing completely outside the rules of civilized society and spreading misery. The marks probably had it coming.

Psychopaths and posers abound in legitimate business, con men just go the distance. Maurer: If confidence men operate outside the law, it must be remembered that they are not much further outside than many of our pillars of society who go under names less sinister. They only carry to an ultimate and very logical conclusion certain trends which are often inherent in various forms of legitimate business.

The Hook:

The key to a good hook is to understand what will motivate the mark into a frenzy of greed. Doyle Lonnegan’s Five Points insecurity, false pride, and ruthless drive for revenge are his undoing.

You see that fella in the red sweater over there? His name’s Donnie McCoy. Works a few of the protection rackets for Cunnaro while he’s waiting for something better to happen. Donnie and I have known each other since we were six. Take a good look at that face, Floyd. Because if he ever finds out I can be beat by one lousy grifter, I’ll have to kill him and every other hood who wants to muscle in on my Chicago operation.

Billie (Eileen Breenan) picks Lonnegan’s pocket and takes his wallet. Gondorff (Paul Newman) cheats Lonnegan at cards and embarrasses him in front of his peers. Then Hooker (Robert Redford) returns the empty wallet.

– Losing and being unable to pay off the bet humiliates Lonnegan, puts him in a vulnerable position.
– Hooker returning the wallet, ostensibly against his own interest, restores order, flatters him, establishes trust.
– Lonnegan’s first reaction is a rage to kill Hooker and ‘Shaw’ (Gondorff), but Hooker’s payback plan hooks him (natch).
– Birds of a feather: Hooker pretends to be from Five Points, like Lonnegan. Someone from the old hood wouldn’t con you, you’re familiar with their ways and can tell they are straight, right?

If you want to hook someone, do them a favor, like returning a wallet out of the goodness of your heart (reciprocity). Even better, let them do you a favor, like showing mercy and not killing you. If I’m helping you, it’s because you’re worth it, right? Once I do a small favor, I’m vulnerable to a slightly bigger ask (consistency and commitment). That’s why the subway panhandler makes a ludicrously tiny ask, like a dime, a nickel, or penny. You don’t want to be the cheapest bastard, right? And now you’re hooked.

In for a dime, in for a dollar. The hook just needs to get the mark to the next stage of the con.

The Rope, The Tale:

The rope is where the roper steers the hooked mark to the inside man, who tells the tale, a great story, a sure thing, so they rush to the inevitable conclusion on their own, or so they believe. Make the mark feel like he is in control.

Show the mark a way to get what he wants most. Show them the shady clerk and Western Union office where the tips generate. Make them see it’s a foolproof plan. In The Sting, Hooker and Gondorff share roper/inside man duties. In the classical, archetypical big con, the roper happens to know a guy with a foolproof plan, who takes over. And then we’re all in this together, sticking it to the real bad guy.

The Convincer:

The pump-and-dumper lets the early suckers take some profits, to rope them into even bigger investments, get them to tell their friends. When you let the mark make a small score to set up the eventual touch, that’s the convincer. In The Sting, they have to do it twice to convince Lonnegan. The second time, he demands to pick the time, and they don’t have the money, so they stall him at the window until he misses the post time. Sometimes a near miss excites you more than a win, which is why slot machines show a lot of near-jackpots.

The Big Store:

For the convincer, you move the mark to the big store, a casino, bookie, brokerage, a place that puts the mark a little outside his comfort zone, gives the con men the home field advantage, gets the mark emotional and fired up. There is noise and confusion, time constraints (scarcity). Buy now because it will double tomorrow! There is social proof – other people making huge bets and winning big. The 3-card monte dealer has a crowd, a shill or two, placing bets and making money. The mark wants to show he’s a big shot, that he knows the lingo, that he can run with the big dogs.

The Breakdown, The Send:

Next thing you know, it’s the mark’s idea to bet half a million on Lucky Dan to win. This is the breakdown: negotiating how much the mark will get fleeced for. The small con just takes you for everything you have on you. The big con takes you for everything you can scrape together. The difference is the send, getting the mark to cash in, to beg, borrow or steal all they are good for.

Taking Off The Touch:

Finally, the mark gets fleeced, but somehow in a way that has plausible deniability. It was all just bad luck! Or it was the mark’s fault, like Lonnegan betting on the horse to win instead of place.

The Blow-Off:

After the flim-flammers have the mark’s bankroll, they need put distance between themselves and the mark before he gets wise. They need to distract him so he doesn’t know what just happened. Your broker got sick, got called away on business and he can’t return phone calls. The boss or the authorities won’t let him do anything for you, the victim. In The Sting, it’s having the law on everyone’s tail after a shootout.

Plausible deniability is the best blow-off. If the loss were just bad luck, or the mark’s fault, betting to win instead of place, the mark may still think the grifters are their best friends, and go back to raise more money for a second touch.

The Fix:

The fix is how the grifters immunize themselves from the law. In the old days, paying off the local cops to give the mark a runaround was a standard trick of the trade.

Cons where the mark does something outside the law make it hard for them to go to the cops. A con where the mark does something stupid, like paying a psychic, cheating on his wife, buying worthless junk, makes him reluctant to go public, because it costs him valuable reputation in real life.

Conclusion:

Via Maria Konnikova: our need to believe, to embrace stories that explain our world, is as pervasive as it is strong. We’ve done most of the work for them. We want to believe in what they’re telling us. Their genius lies in figuring out what, precisely, it is we want, and how they can present themselves as the perfect vehicle for delivering on that desire.

Trust is evolutionarily favored. Humans have evolved to operate in and identify with groups, Ayn Rand notwithstanding. Societies with more trust function better, experience more economic growth. Evolution has programmed us to learn heuristics that make us feel confidence in certain situations where it may be unwarranted.

People who can fool themselves into thinking things are for the best function better, are more disciplined, start and finish more projects. Athletes who can visualize success win more medals. And people are predictable, reasonable, good…most of the time.

If you think you are not susceptible to being conned, you are probably wrong. It’s like being hacked, it can happen to the best of them. And if you really are relatively invulnerable to the con, you may be less trusting than is optimal. You can’t play your friends like marks, or expect them to act like con men. If you lose, sometimes them’s the breaks. Better to sometimes be cheated than never to trust.

Probably no one is immune, given the right motivation, circumstances, and an expert con artist. But demanding good independent due diligence, heeding red flags, knowing the history, knowing the elements of persuasion and the tricks of the trade, and above all self-awareness to slow down when you are getting carried away, will make most con artists look for better marks. A Madoff isn’t going to pitch a Warren Buffett. He’s going to pitch the guy who thinks he deserves the Warren Buffett return without going the extra mile.

The con is an evolutionary counter strategy, a game theory exploit that works if people are more trusting than is warranted. The cuckoo that deposits eggs in another bird’s nests, the insect that mimics ant queen noises so ants take care of them, are nature’s con artists.

There’s a natural balance, where there is enough trust to make society work, and enough skepticism to limit con artists’ ability to destroy civilization.

In the heyday of the big con, the world was small, communities were built on a large degree of trust, they didn’t communicate with each other, there was no central FBI. The big con thrived.

In a strange way, the Internet has given the edge back to some con artists. Communities have splintered. Water-cooler and stoop interactions that used to be private are now exposed to interlopers. By connecting people in a ‘global village’, gossip and rumor travel fast, some social dynamics have returned to the old days of pitchfork mobs and public shaming.

Photoshop, even audio and video, can be faked. So, are we doomed to a world of perpetual grift and fakery, and diminished trust? Yes and no.

Yes, because there has always been grift. As long as there are marks with a little too much trust, and con men with the psychology of the dark triad, there will be abuse. There is never full immunity.

But no, because tools evolve, people evolve. Remember when we thought the Internet meant the spread of democracy and color revolutions everywhere? Now we get right-wing populism in democracies, and always-on digital surveillance in autocracies and mafia states.

The system hasn’t developed immunity from fake news fueling extremism, not because immunity is impossible (although perfect immunity is), but because we haven’t really tried yet, by identifying the markers of what fake news looks like, and bad actors who spread it, the difference between viral extremism and astroturf fakery.

The natural balance between marks and grifters has been upset. Over time, we’ll evolve the tools and the skepticism to restore the balance. One hopes, without losing our freedom or grip on reality. In the meantime, be wary.

One thing I never did before is post the most popular sites shared by the contributor panel. So here it is, three different ways.

At the bottom is a raw dump of the 1000 most shared sites, with the emphasis on raw. It includes all your most popular mainstream media sites, social media sites like YouTube and Instagram, official government primary sources, service providers, a lot of sites that are not strictly financial blogosphere.

Above that are the sites that most often hit the front page, either via the AI filter or your faithful human editor.

Finally, at the top of this post is probably what’s of most interest, the 150-odd most shared financial blogs, the raw dump filtered by ‘arbitrarily considered by me to be a financial blog.’

I took out the media sites, popular social media platforms, tech blogs, service providers. I left the ones that are primarily economic, financial, market commentary, and ‘generally considered to be part of the financial blogosphere and not mainstream media.’

I left out the top tech blogs, but left in Stratechery and Electrek, which are must-read if you follow e.g. Apple and Tesla. I left in some aggregators that are pretty popular in the financial blogosphere but left off others that are maybe less central or closer to mainstream media. Maybe some others are questionably finance-adjacent and I couldn’t bring myself to delete because I thought they are must-read. It’s necessarily a little arbitrary but hopefully not too arbitrary.

But if you are so inclined, you can peruse the full 1000 most shared and make your own list of favorites to follow or add to your RSS reader.

Thanks to all my friends who make the fin-social-twit-blogosphere still interesting and crazy after all these years. I hope this helps you find some new folks to follow and helps you gain some new fans.

‘Freedom is the freedom to say that two plus two make four.’ – George Orwell

When Trump tries to brand the swirling swampy maelstrom around him as ‘Spygate’, it gives the game away. If you get busted by the cops with Russian entanglements in your campaign, one way to go is to claim ignorance and that it was somehow a misunderstanding or above board.

But if you’re saying the counterintelligence guys, the media, the people don’t even have the right to ask questions about Russian operatives, you doth protest too much. The clear implication is that the answers to those questions are really really bad. It’s like a perp saying “I was framed!”

Tell it to the judge.

What would you say FBI counterintelligence does? They look into efforts by Russian operatives to gather information and create mayhem in the US. So, here are some Russia/Trump contacts:

Papadopoulos (pled guilty): told Australian High Commissioner (ambassador) in the UK that Russians had Hillary’s emails and were going to share them to help Trump. And when that actually happened, Aussies said, hmmh, that’s interesting, briefed the FBI, and the investigation started. (Also numerous other Papadopoulos contacts with Russian agents, Mifsud, a ‘relative’ of Putin’s, etc.)

Manafort (indicted): in deep with Oleg Deripaska and Ukrainians, laundered money like it was going out of style.

Cohen (about to be indicted unless he’s singing like a canary): Emailing with Putin’s office about building Trump Tower Moscow (when he’s not paying off ‘a hundred’ Trump affairs and probably abortions, and taking massive bribes from likes of Novartis, UAE, KSA, and a sketchy Russian oligarch, and using the funds to benefit Trump via the hush-money slush fund.)

Are you really saying the FBI isn’t supposed to look into this and get informants to discretely ask questions? If not, what would you say they are supposed to do around here? Not ask any questions that are embarrassing to the President because he is above the law?

How Russians meddled is a question of overriding national importance. If you can’t answer reasonable questions about it from the FBI, Mueller, the press, and the American people, you clearly cannot operate effectively as President (as evidence has repeatedly shown).

Between the giant Cohen bribes, the likelihood of Cohen either flipping, or his files incriminating Trump, and Trump directly asking Sessions to oversee the Russian inquiry after he recused himself, which is prima facie obstruction, the wheels have fallen off. We know how this is going to end. It blows my mind that Trump thinks that just repeating ‘Spygate’ will obscure that, or that ~40% of Americans approve of this half-wit wannabe mobster shitshow.

Weaponizing reporters’ superhuman good faith and desire to appear fair, in order to make relentless lying and manufactured insane bullshit appear credible, and exploiting supporters’ unwarranted and unreciprocated loyalty to destroy truth and institutions, is not going to save you from truth and judgment.

Jeff Bezos tells a story about how he gave his grandmother a hard time about smoking until she cried, and his grandfather took him aside and said, “You are going to figure out one day, that’s it’s harder to be kind than to be clever.”

Interestingly, Bill Gates has a similar story about being taken to a psychologist as a child because he was being disruptive. He told the psychologist that he thought it was unfair that he had to live by illogical rules and he deserved to win the argument with his parents. The psychologist told him kids always win in the end because they outlive their parents and he should cut his parents a break.

The lesson here is: don’t focus so much on winning the game that you forget the meta-game. And there is always a meta-game. Don’t miss the big picture. And there is always a bigger picture.

The dumb bear runs away when you jangle your keys. The smart bear gives you a look that says, you idiot, those are just keys. And keeps coming back messing with your trash cans and your car and your house. And the smart bear gets shot.

There’s a saying on Wall Street, “always leave something on the table.” The casino will do their level best to kill you at the tables, but they’ll do it with a smile and a free drink and give you 30% back in comps to keep you coming. Acting like it’s just a big party and we’re all in this for a good time goes a long way, even for a fundamentally extractive business.

The worst people to deal with on Wall Street (or anywhere) are the ones who aren’t looking to generate more value than they extract, are only looking for an angle, to make maximum profit while blowing up the relationship and moving on.

In the US we’ve become really good at prospering in the short run while losing the meta-game. The financial crisis was a moral crisis: make the liar loans, make them look AAA, hit the numbers, get the bonus. And then the whole thing blows up.

People should think more about the meta-game. Libertarians think, you give people freedom, that solves everything. Left-wingers think the right policy directive can achieve any outcome. It would be better to think more about engineering the meta-game of markets for goods and services, markets of ideas, so they work effectively and maximize freedom.1

Facebook and Google are re-engineering society. But they can’t really admit it. They’re not supposed to measure the consequences their designs have in the real world. There has to be a pretense that it all happens organically and driven by the free choices of the users. Otherwise the right-wingers go nuts that they are being censored and manipulated. And the left-wingers go nuts that corporations are privatizing and monetizing civil society and data.

The founding fathers knew that freedom works only to the extent people are decent, and they had to create a form of government and institutions that allowed society to function while preserving the maximum amount of freedom. We seem to have forgot that and take maximalist positions on freedom and/or achieving objectives regardless of the Constitution, sometimes at the same time. Instead of sophistic rhetoric and partisan talking points, it would be better to start talking about engineering our institutions and decent society, and creating win-win games.

Trump is the king of approaching everything as win/lose and losing the meta-game. You make a lot of seemingly great deals with other peoples’ money, take big bucks risk-free to attach your name to Trump University, then one day you’re broke and exposed as a flim-flam artist. Not having skin in the game makes you the worst kind of dealmaker. And in the long run gives you the worst kind of skin in the game.

You can break the deals you don’t like, make the base happy, undo an Obama signature initiative, get a sweet payoff from Sheldon Adelson and Sheikh MBZ. But you can’t simultaneously pursuing a nearly-identical deal and expect counterparties to trust you and act in good faith). Deport veterans, make a torturer CIA chief, pander to the white supremacists, and maybe you think you’re triggering your opponents and putting them on the back foot, but you’re losing the meta-game.

Acting decently isn’t some rose-colored pie-in-the-sky do-gooder dream world. Ethical conduct is the ultimate meta-game. A lot of US power exisits because we (mostly) tried to act decently, be a beacon of stability, freedom and democracy, create and support multilateral institutions. And we’re killing the goose that laid the golden egg.

So much winning. We’re not getting bored, that’s for sure. But we’re losing the meta-game. Bigly.

1Maybe they do? Maybe a lot of libertarianism is just a meta-game for powerful interests wanting the freedom to rig the game to give them even more power and wealth? Maybe a lot of egalitarianism is a meta-game ivory-tower philosophers leverage to grab power? If so, all the more reason people need to think about the meta-games.

The investing blogosphere is all over the first two. Now, for something completely different, we help you with the last one! Inspired by Sloane Ortel’s post, we’ll run some analytics on a dataset of investment firm names, culminating in our very own algorithmic fund name generator.

Assembling data from various sources, scrubbing and deduplicating, we built a set of about 20,000 names.

As a warmup, here are the most frequent words found in company names:

The most frequent bigrams or 2-word combinations:

Word2Vec is an algorithm which, given a corpus of text, maps words to vectors of floating-point numbers, magically distilling syntactic and semantic attributes of each word.1 Vector representations of words are used for machine translation, sentiment analysis, intelligent personal assistants like Siri and Alexa, and other natural language processing applications. Word2Vec word vectors can be uncannily accurate in representing meanings and relationships between words.

We could train our own vectors, but this is not a large corpus, and there are many pre-trained vector sets based on the Web, Wikipedia, different languages and corpora. Let’s load the set of vectors trained on Google News, map our frequently used words, and cluster them.

It’s a bit like taking a word and algorithmically free-associating similar words that are used in fund names.

Finally, we can train a machine learning algorithm to automatically generate realistic-sounding new names based on our corpus! Use this link or the form below to generate names based on a starting string (or leave blank).

Some names may be similar to existing names in the corpus, which are the property of their respective owners.

Other names are a bit random…use them for inspiration for your next corporate entity…or if you need to generate random realistic-looking text for testing purposes or to fool a spam filter. We make no representation about the regulatory compliance, appropriateness, or marketing value of generated names!

We hope this will free valuable time from the fund naming problem to let managers focus on generating alpha.

1 How does Word2Vec work? It’s like a Netflix movie recommendation system, but for words. The Netflix recommender maps each user and each movie to a vector. It tries to find

1. A vector to represent each movie and
2. A vector to represent each user such that
3. When you multiply those two vectors, you get a number that predicts how the user will rate the movie.

As users rate a lot of movies and the system trains and improves the vectors, different vector components start to represent movie features, like action-adventure, rom-com, scifi, etc.

Now to see how Word2Vec assigns vectors to words, substitute the statement ‘user u likes movie m‘ with ‘the word goldman frequently occurs in same context as the word morgan‘.

By using a large corpus to train vectors which predict what words arise in similar context, we arrive at vectors that represent a sometimes-shockingly complex knowledge about each word, bordering on understanding. For instance, we might find that the word vector closest to ‘Paris’ – ‘France’ + ‘Germany’ is ‘Berlin.’ In other words, Word2Vec in some sense understands that ‘Paris is to France as Berlin is to Germany.’ This post is a good intro.

You go back Jack do it again
Wheel turnin’ ’round and ’round
– Steely Dan

I’m a bit of a Bitcoin skeptic. I think it’s a bubble and at some point the dancing stops and some folks get left holding a very very virtual bag. If you’re one of those who thinks the real bagholders will be the ones owning dollars in the ‘legacy financial system’ after the advent of millennial kingdom come, you can stop reading.

Nevertheless I’m very bullish on blockchain. Maybe we’ve barely scratched the surface and it will be as ubiquitous as the Internet.

Cutting to the chase, I think $10,000 is at the high end of plausible valuations. If Bitcoin is a manipulated market, which may be the case, this week’s launch of Bitcoin futures could very well pop the bubble and crash the market. Because for the first time, you can have real price discovery from smart money, that can bet big, go short in any size at any price where it can find a counterparty, and doesn’t have to worry about counterparty risk, custody w/cybersecurity etc.

But wouldn’t it be ironic if futures cost less to trade than Bitcoin on the blockchain with better liquidity, less risk? Maybe you actual need brokers, exchanges, central clearing, daily settlement, custody, credit, margin, in order to have a complete, safe market? Who knew?

Somehow, Bitcoin manages to be slower and more expensive to trade than ‘legacy’ trading venues, with none of the liquidity or mitigation of sundry operational risks. Not to mention that recurring staple of Bitcoin news, the record-breaking heist.

Turns out the devil is in the details of market structure. The magic of the blockchain notwithstanding, most Bitcoin trading may take place off the blockchain and look a lot like traditional financial markets.

If Bitcoin is not a manipulated market, maybe the bubble has farther to go. But how much farther, realistically?

If Bitcoin is a currency, then compare its current ~$300b market cap to pre-QE USD base money of ~$1,000b. Seems like a lot for a ‘currency’ that has minimal legitimate real-economy transaction footprint, vs. something that ran a then-$14t GDP economy backed by nukes and aircraft carriers. Actually, an order of magnitude more real-economy transactions throughout the production chain, plus a lot of black-market and foreign transactions that don’t show up in GDP, and never mind financial transactions.

Demand for a currency as a medium of exchange is a function of the real-economy transactions it enables.

Of course Bitcoin is the most obvious bubble ever. And the bubble makes it risky for real economy transactions. Everyone who ever spent 10,000 BTC to buy a cheese pizza is crying in their beer now. Until volatility settles down, people will be reluctant to transact with it and tend to hoard it. That’s what deflation does. If your currency will buy more tomorrow you won’t spend today. It’s great for a financial asset but terrible for an economy and a currency and a payment system. Modest, predictable inflation is indispensable grease in the wheels of an economy at the mercy of menu frictions and behavioral heuristics like loss aversion and money illusion.

It’s a catch-22. The volatility and constant rise in price make it unsuitable for real-economy transactions, which mean it can’t justify the ever-rising price.

The price has achieved escape velocity from reality.

I think people who say Bitcoin should go to $400,000 are either making simplistic arguments to get on TV or talking their book. They aren’t doing anyone any favors. Except maybe ICO con artists swindling their marks.

It’s hard to value Bitcoin as long as it’s untethered from the (legitimate) real economy. Have you ever seen someone wearing jewelry made of Bitcoin? Is Bitcoin going to fill your teeth or coat your windows or make your electronics corrosion-free? How much use will Bitcoin really be after the apocalypse? Outside of paying for contraband and malware ransoms and evading capital controls, what real use is it? Without any linkage to the real economy, why is the low single digits of financial wealth in gold the correct comparable to come up with $400,000 per coin, which would mean $8t total outstanding or 1/3 of US stock market cap?

In what ways is Bitcoin equal to, let alone superior to gold in liquidity and long-term reliability as a value store, linked to the real economy? Shouldn’t there be some discount in case a digital asset superior to Bitcoin 0.x turns up? Isn’t it some function of what real wealth alternatives are available, what their relative utility is for yield and risk expectations and real-world acceptance, how much the market demands of each?

What is an appropriate valuation metric? Let’s start with the novelty value. $10b is a round number. That’s order of magnitude for Beanie Babies or Pet Rocks, adjusted for inflation, and the more interesting experiments richer geeks can do with Bitcoin.

Add an appropriate valuation for the Bitcoin needed by black markets. This may vary widely over time, depending on adoption, depending on whether there has been a recent crackdown on the latest Silk Road / Alpha Bay, depending on current money laundering flows to/from capital controlled jurisdictions. But you can handle a lot of transactions in a year with each unit of Bitcoin. $100b of Bitcoin you could probably recycle through at least ~$1t of transactions per year with not much velocity-optimizing financial technology infrastructure.

Pulling a wild-ass guess out of my you-know-what, the largest market cap I can justify for black-market transactions is on the order of $100b. This is considering the size of black markets, what percentage of transactions might start to be done in Bitcoin in the not too-distant future, some reasonable velocity, comparing to the number of large-denomination USD and euro bills outstanding, the gold inventories that back financial instruments.

As a store of value, if you want to use gold as a comparable, you have to exclude gold that isn’t a private financial asset. You have to think about how the market will shake out between gold and Bitcoin if they are close substitutes. You can’t just assume Bitcoin replaces gold 1 for 1, or expands the market for ‘hard pseudo-currency store of value’ 2 for 1.

Bitcoin for black market transactions and as a store-of-value has issues: volatility, significant transaction lags and fees, the fact that it’s not as anonymous as you may think, the fact that authorities probably can and will crack down on it hard when it’s worth more to them dead than alive.

So you need to apply some discount for the possibility that cryptocurrencies will take only a small chunk of that market, or other alt-coins will come out on top. And maybe some premium for the likelihood of mainstream adoption in legit markets.

True, Bitcoin is more transportable than gold and can even be used for electronic payment. On the other hand the link to the real economy and long-term reliability as a store of value are weaknesses. Frequent flier miles, gift cards, and other forms of private electronic scrip are not an investable asset class. Scarcity value can be mitigated by other cryptocurrencies popping up.

I’m still a skeptic. If Bitcoin gains traction in the real economy, it has to be stopped, or highly regulated. Because governments rely on taxes. They don’t like giving up seignorage, management of economic policy, and use (abuse?) of the financial system for law enforcement, sanctions, foreign policy purposes. And China, for now, has shown that you can actually bring your entire Internet under state control. It’s technically feasible to stamp Bitcoin out or at least, repress it to within an inch of its life.

Governments will bring Bitcoin to heel if it challenges fiat currencies. So Bitcoin as a financial system outside state control is an oxymoron. Either it’s a marginal black-market construct, or it’s a tightly controlled appendage to government currency markets, like gold. It cannot be both mainstream and outside state control.

I could be wrong, but my wild-ass guess for the reasonable order-of-magnitude ‘terminal’ value for Bitcoin is in the $1000-$10,000 range (market cap of $20b-$200b, order of magnitude). I don’t have high confidence, maybe 50%. Visibility into the demand for black market activity and as a store of value is pretty limited. Maybe Bitcoin gets superseded or stamped out almost entirely. Or maybe there is something more to the store-of-value argument than I’m seeing. Aswath Damodaran wrote the book on valuation, and he says you can’t value Bitcoin. But his definition may be narrower than mine and surely you can place some order of magnitude limits on a plausible relative price.

I think Bitcoin valuation and prospects for mainstream adoption are overblown. I think the 2017 runup is due to bubble dynamics. It’s the most perfect bubble ever. There is no value metric, no intrinsic value, no PE, no interest to collect on it. If you think it supersedes the ‘legacy’ financial system, there is no valuation too high.

But let’s talk about why I love the blockchain.

Blockchain is a secure distributed database service. In the old days a database meant something like Oracle. Then the Internet came along, and because Oracle technology and pay-whatever-we-can-extort enterprise pricing didn’t work for something like Yahoo, we got open-source databases. Open source just means tech companies like Google, Facebook, all the way down the chain, develop standards and norms and software in areas where they don’t compete because competition would stymie progress and profits in the whole ecosystem.

Even competitors cooperate some of the time. Warring nations have conventions against chemical weapons or first use of nukes. If you violate them you may win the war but you may not have a planet to live on.

Buying Microsoft or Oracle software and giving them a big vig and strategic power is a nonstarter. Every company building their own proprietary stack of OS, database etc. is also a nonstarter. So they support efforts like Web standards, Linux, Apache, and MySQL and share the technology around them, which is not very strategic, and focus on competing further up the value chain.

MySQL is a funny case. Because MySQL was bought by Oracle. Even in the open source world, you cannot escape a principal-agent problem. You back an open-source software project, the developers and the managers of the legal entity can sell you out. Now you still have a software license but you have an exit/voice decision, where exit means forking the project. (Anybody remember CDDB? The most blatant fencing of digital commons to date, privatizing something people built as a public good.)

Blockchain takes the open-source paradigm to a meta level. In ancient times, suppose some folks started an open-air market for securities under a buttonwood tree. They develop ways of doing business, they eventually find the need to invest in infrastructure, to document and formalize practices. They create a legal entity and build a nice building with a pediment and a frieze. Now you potentially have a principal-agent problem if the board and folks who run it can make big bucks and run it for their own benefit or a club of insiders.

Software is eating the world, and blockchain is how it eats this sort of coordination problem. You enshrine the rules of the exchange in peer-to-peer software which every exchange member runs and which uses a common blockchain distributed over all members’ computers.

Now you don’t need an exchange floor, and you don’t need a rules committee, or much of an organization at all, the rules are enshrined in the software, and the members run all the IT. Now, no matter what political shenanigans ensue, no one can change the rules unless everyone agrees to run new software. If only some of them switch, you have a fork, and effectively two exchanges competing until one wins. The exit-voice problem is turned on its head. In order to change the rules of the game, you have to get everyone to agree to run the new software.

If you were starting an exchange, or any kind of market design today, frequent-flier miles, Wikipedia, organ transplants, would you rather enshrine the rules and data in a legal form, in a central organization, or in software?

For many collective action problems, software is just better. Not necessarily because it works better, but because it’s transparent and has built-in resistance to shenanigans. (Here’s a good explainer.)

Does it eliminate shenanigans completely? No, you still have governance, politics. But it moves everything into the software and the blockchain where it’s transparent, and no one can unilaterally change the deal. This is has potential to be a proverbial Big Deal, a game-changer.

Is blockchain better in every way? No. Anything that can be done on the blockchain can be done much more simply, much more efficiently in a centralized database. But that database is a nexus of principal-agent problems. It can be hijacked. Blockchain is a CAP tradeoff to perform very well in terms of availability and surviving network outages, but poorly in that consistency is potentially very eventual when it’s under strain. When the database is distributed among the users, it’s highly resistant to shenanigans but not necessarily highly performant.

How much does performance and efficiency matter? Communists made the argument that capitalism is not very efficient. Capitalists spend enormous resources on advertising to get people to consume, you have dozens of varieties of corn flakes, you have four gas stations competing on four corners of an intersection. What a waste!

But capitalism is extremely effective at giving people incentives, at innovating, at searching the solution space for best practices. In other words, at evolving.

As Darwin said, “It’s not the strongest of the species that survive, nor the most intelligent, but those that are the most responsive to change.”

Sexual reproduction wastes a huge amount of energy that could possibly be better put to use acquiring food and resources for survival. But it allows the species to rapidly mix and match features, to evolve rapidly.

In a similar way blockchains may be quite complex and inefficient in computational resources, but they may be a catalyst to allowing many institutions to evolve, to rapidly test a large number of new organizational models and incentive structures.

Technology seems to advance by alternately taking things apart and then putting them back together. We went from highly centralized and integrated mainframes to distributed PCs, back to cloud computing, which is an evolved mainframe model built on virtualized PCs emulated in software. (Predicting that in 1984 would have been a 1-way ticket to the loony bin.) We went from AOL and Compuserve to the unbundled, distributed Web and back to Facebook and Google walled gardens. Mammals replaced dinosaurs, and at each iteration capabilities improved.

Unbundled, modular, open systems evolve faster because we can rapidly add and improve individual parts, like Unix or an industry standard architecture PC with expansion slots. When we reach a point of diminishing returns, when we have fully explored the search space, when we have figured out best practices, we can usually improve it by building a highly integrated system, like an iPhone. Integration makes it possible to simultaneously optimize all the hardware and software components to work well together.

Eventually, technology will evolve again, and perhaps a more open system will regain an edge in mobile devices. But when a highly refined, integrated and optimized system works, it’s a thing of brutal beauty that destroys everything that competes with it. (I’m thinking of the old IBM, Microsoft Windows, and the iPhone).

More likely than something replacing these apex predators, they become commoditized and cells in higher-level, even more evolved organisms. (Artificially intelligent robot swarms coordinating peer-to-peer? Everyone living in a virtual reality matrix? Who knows what the next level of evolution may bring.)

I think Bitcoin and blockchain should be seen in the light of this dichotomy, this swing of the pendulum between open and distributed v. centralized and integrated. The pendulum has swung too far towards centralized cloud services and the ‘Fearsome Foursome’ of Facebook, Apple, Google and Amazon (maybe the ‘Frightful Five’ with Microsoft) owning our lives.

Over the next decade I foresee huge pushback against the Facebook/Google/Apple mobile/cloud model, and crypto, blockchain, peer-to-peer apps will be a big part of that.

The smartphone/cloud (and especially Facebook) is Huxley’s soma – we are addicted to notifications and ‘likes’.

The smartphone (and especially Facebook) is also Orwell’s telescreen. You carry it everywhere in your pocket and it monitors all your communications, everywhere you go, whoever you interact with, even in real life.

Some people buy cloud microphones for their kitchens and bedrooms and pay big tech companies to spy on them. Even Orwell wouldn’t have dreamed of that.

Big Brother uses AI to learn your greatest fears and desires and what to show you when, to optimize you for engagement and manipulate you into clicking.

The level of data collection is more than a risk, it’s a practical guarantee of totalitarianism. The only question is whether it’s techbros and rogue AIs who are going to watch everything you do and create the rules of the marketplace to determine what you see and watch; or the state; or thugs who hijack it to gain power.

The beauty of 30 years of open market free-for-all tech evolution and exploration is giving way to brutal centralization and integration. That’s why a free and open internet in the form of net neutrality is so important, and the need to resist authoritarianism in all its manifestations.

I think 20 years from now the Bitcoin frenzy may be looked upon as a fad. Bitcoin isn’t going to topple the financial system. Blockchain will be adopted as a sustaining innovation by banks and governments. To some extent, after the crash, Bitcoin might survive in various niches at a plausible market value, and slowly start a climb up the slope of enlightenment to the plateau of productivity.

But the frenzy also reflects a desire to challenge centralized power structures. People are dissatisfied with institutions. Wealth and power are centralizing and gaining commanding technological advantage over the individual. Blockchain and peer-to-peer crypto paradigms will challenge centralized power structures in unforeseen ways.

I’ll start at the outset by saying I’m not a huge fan. I was a kid in New York City in the 70s when there were 5 murders a day. Being a city boy, and especially at that time, colors my reality. It’s not great to live in a town where most taxi drivers have a weapon under their seat, many bodegas have a weapon behind the counter, stray bullets are a risk to consider. Knowing there are a lot of crazies out there colors my reality.

There are some people who make the argument that a society where more people are armed is somehow better. I’ve seen it and it’s not. If you don’t understand that the point of politics and civilization is to not sort differences out with weapons, you can probably stop reading, if you somehow got this far.

The argument that ‘you can’t regulate evil, if you regulate weapons, only criminals will have weapons’ is absurd on its face. You criminalize the activity, and you also try to reduce harm. We try to minimize harm from all kinds of devices and activities, from Kinder eggs to Sudafed, even if it’s not 100% effective.

‘The only way to stop a bad guy with a gun is a good guy with a gun’ is also absurd on its face. Of course, the good guys, i.e. trained law enforcement and security personnel, should carry guns when necessary. And also, of course, if it’s possible to keep LV-style MacGyver automatic weapons out of the hand of the bad guy or crazy guy, you should try to do that.

‘Guns don’t kill people, people kill people.’ Yeah, people with guns. Do you want to keep nuclear weapons out of the hands of Kim Jong Un? Then you understand why I want to make it harder for my crazy neighbors to have guns.

‘Terrorists can kill people with knives or trucks, do you want to ban those?’ The old slippery slope argument…you’d have to ban sticks and stones too. Well, until a lone lunatic kills 58 and wounds 500 with a knife, that is the dumbest argument in the world. And maybe it would be a good start if we applied motor vehicle licensing, safety, insurance standards to deadly weapons. I have seen, with my own eyes, libertarians question the morality of having a DMV. Inexplicably, the same manifestly stupid argument gains credence when applied to managing the externalities and costs imposed on the innocent victims and on the public by deadly weapons.

If you live in a relatively safe city or suburb and you think a gun makes you safer, you’re almost certainly wrong. You’re much more likely to get shot if you own or carry a gun. You may think you’re a responsible, well-trained, level-headed gun owner, but probably so did every other parent who got shot by a toddler. You’re probably not as special as you think. On a bad day, normal people are susceptible to alcohol, murderous rages, depression and other mental illnesses, and guns don’t make any of those things any better.

The cost of easy access to guns is very high. This Las Vegas massacre is going to be 10 figures of direct costs for medical, first responders, lawsuits. Years of recovery from physical and psychological trauma for survivors. Then there are all the loved ones who will not have a spouse, a parent, a child. Then there is the fact that every cop who approaches a car has a risk of encountering a gun, the reality that their first responsibility is not to serve the public but to live through the day and go home at night, making trigger fingers itchy. Despite the fact that that society is less violent than ever, acceptance of police-state tactics is increasing. Places with fewer guns have fewer murders, have higher trust in law enforcement and in society generally.

That’s an example of what I tend to view as the fascist-libertarian nexus. Arguments in the name of liberty lead directly to and justify authoritarianism. As George Washington said, “Arbitrary power is most easily established on the ruins of liberty abused to licentiousness.” People make the strange argument that the Second Amendment is a check on tyranny. Strange, because the Second Amendment wasn’t put there to license war against democratically elected government, or treason, or rebellion. When a minority group protests, with some justification, that a tyrannical government is using excessive force against them, with bad shootings caught on video on a regular basis, the people who self-identify as pro-liberty seems pretty quick to label the protesters as terrorists. When it’s oppressed ranchers on Federal land, it’s one thing, but when it’s Black Panthers marching in the streets with guns, even Ronald Reagan and the NRA can agree that open carry is an act of violence. When the disenfranchised try to exercise freedoms, even to protest peacefully, it somehow becomes a huge problem. If you’re making freedom arguments which only apply to people who are already empowered, it bends toward fascism and feudalism.

Let’s face it, a Muslim does this, people go nuts. It’s a new 9/11. They hate us for our freedom! A black man does it, you’ll seem some colorful language on social media. White man does it, crickets. It’s the price of our freedom! You cannot tell me race, fear of the ‘other,’ latent prejudices, aren’t key factors driving the disparity in emotional and policy response.

The Second Amendment maximalist argument is, in my opinion, a complete red herring. The Second Amendment contains the clause, “a well-regulated militia.” It explicitly foresees regulation. The NRA conveniently omits that clause, perpetrating what Warren Burger called a fraud on its extraordinarily gullible members.

The Second Amendment came out of debates over desirability of standing armies, need for slave patrols, fears that the Federal government would ban slavery or otherwise intrude in the affairs of individual states. The ‘well-regulated’ clause is saying, the motivation of this amendment is that the Feds may not ban and assume functions of legitimate state and local armed militias, police forces, national guards, etc.

Of course it also bears on individual rights to bear arms. But at some level you have to draw a line and say people cannot have personal RPGs, machine guns, WMDs, or something. Machine guns and guns above .50 caliber seem like a pretty reasonable limit, which is currently enforced (with obvious loopholes, i.e. Las Vegas.). A system to keep guns out of the hands of known organized criminals, convicted felons, domestic abusers, mental patients, and people who could not be part of any ‘well-regulated militia’ seems both reasonable and falling clearly within the language and intent of the Second Amendment.

When you read any part of the Constitution, or any law, you need context. The First Amendment says Congress shall make no law abridging freedom of speech. But you have to read it, or any law, as “you shall not, other than to the extent reasonable and necessary to protect other rights and enforce other parts of the constitution.”

Many, many crimes are essentially speech: trademark infringement, fraud, conspiracy, child pornography. You cannot argue that the First Amendment means you cannot be convicted of fraud, or conspiracy to commit murder. Well, you can argue that but you will lose. Once the speech becomes the nexus of a criminal activity, it is no longer just speech. In order to preserve the other rights in the constitution, like patents, it becomes necessary to construct reasonable limits around what is considered protected speech.

These are common sense reasons why regulation around guns is unavoidable and explicitly Constitutional. That being said, I recognize that every place isn’t New York, people have strong views about guns, there are different cultures and realities on the ground. If you’re in a rural area with no law enforcement response within an hour, exposure to nearby drug and human trafficking, etc., the context is very different from being in a safe city or suburb. And even if not, there are just different cultures and views on the matter which should be respected in a democratic society.

I accept that people in Maine will have a different view of firearms than people in Boston, so for the most part, I would leave the gun question to states and local governments.

However with freedom of travel and commerce, you cannot effectively restrict guns in Boston if anyone can drive to Maine, walk into a store, buy firearms, get back in the car, and drive back to Boston. (or Chicago/Indiana)

Here is the approach that would make sense to me.

In order to enable state and local regulation, you must have Federal registration of all firearms. You want to own firearms for self-defense, hunting, sport shooting, you and your guns have to be in a national database. The gun’s ballistic signature is in the database. Your fingerprints are in the database. You want to sell or gift the gun, you have to make sure to update the database under penalty of Federal law. Whenever the cops pay you a visit, they get a popup noting what guns are associated with your address, car etc. A crime gets committed, the cops look up who has the weapon and what its chain of ownership was.

If you are a Boston resident, you buy a gun in Maine, the Boston PD gets a popup. They maybe pay you a visit, ask you where the gun is, remind you of the local gun laws. If it’s for skeet shooting at your place in Maine, that’s fine. Just comply with your local laws and keep the records updated.

Local regulation, which states and municipalities might wish to consider:

Taxes on guns, ammunition to pay for the regulatory regime and the significant economic externalities of gun ownership.

This would be the American way, I think. Move the debate to the local level, so it’s not, Washington wants to take away your guns, and let local communities determine what common sense means to them.

We’re in a vicious spiral of loss of trust in government, institutions, each other. Americans support gun laws that would make a difference, but can’t get them passed, further eroding democracy and trust. They don’t trust the government to keep them safe (even though it’s hella safer than it used to be), so they buy guns. Then every argument carries the risk of deadly escalation, whenever someone reaches a breaking point there are potentially dozens of casualties. Then cops militarize and sometimes escalate unnecessarily, further worsening trust.

We don’t want to go back to the Wild West. Harsh local restrictions probably won’t make a very large difference in gun deaths. But a comprehensive approach would reduce gun deaths, the terrorism threat and irrational fears about it, and help restore trust in cops and democracy.

It’s probably going to get worse before it gets better. But it’s up to us to remake those institutions and that trust, or turn into Argentina with nukes, or worse.

This anti-diversity manifesto has been making the rounds, with calls to avoid “socially engineering” diversity in response to “veiled left ideology”, to “de-moralize diversity”, to “de-emphasize empathy”, to “prioritize intention”, and to “be open about the science of human nature” which is claimed to confirm a lot of right-wing priors and stereotypes.

I have questions for the author… Really? You don’t understand that a corporation is a form of social engineering for specific objectives? You don’t know that small effects at scale result in disproportionate impacts? You don’t realize that results matter as well as intentions?

And you don’t understand that, at Google of all places?

According to you, Google’s new motto should be, “Don’t do evil, but if evil is caused by our biases or actions, prioritize intention?”

If you don’t know that all companies, all engineering is social engineering, but especially Google, then you don’t know engineering, you don’t know society, and you really don’t know Google and aren’t doing your employer any favors.

You really think the rest of the world is going to look at this and say,“sure Google, go ahead and remake the world in the image of engineers like you? We’ll just be over here, blissfully watched over by your machines of loving grace?”

Immanuel Kant’s categorical imperative is a foundation of Western Enlightenment ethics: “Act only in accordance with that maxim through which you can at the same time will that it become a universal law.” It’s the Golden Rule taken to a logical extreme: Treat others as you would like to be treated. Think globally, act locally.

Is possible to act that way all the time? No. Not even if you’re some kind of saint. You have to be a little crazy to say, software should be free, so I’m only going to use free software because if everyone did that the world would be better.

Who can even say what the consequences would really be? It’s a foundation of ethics to think through the consequences of your actions and act accordingly, and yet, to predict the consequences of any universal law (or anything) is also an act of hubris.

The Ayn Randian view is that everyone should act for their own benefit. Government and even altruism is immoral. That’s even more extreme than Kant. It ignores the fact that humans do anything worthwhile in groups, not just as individuals, and organize into hierarchies with rules, enforcement.

A more enlightened Randian view is that everyone pursues his or her own self-interest, but does so strategically. Governments and charity can be social contracts that people enter into freely to promote the good of all.

Game theory, where everyone acts strategically in their own interest, is an antithesis to Kant. Treat others as you would expect to be treated. Think globally, strategically about how everyone else will respond, then act locally, in your own self-interest.

The synthesis, is how do we build a society of laws, institutions, corporations, and technology like Google, that lets imperfect humans, who are boundedly ethical and boundedly strategic, work together to survive and prosper?

If you’re human, you have intelligence. It’s the apple from the tree of knowledge. In no earthly religion or philosophical system do you get enlightenment or salvation based on good intentions. You have to think through the consequences of your actions. You are free to choose but not to escape the necessity of choice, and the consequences.

The sentiments expressed in the screed are, to be generous, immature. It’s what happens when a smart kid’s idea of the way the world should work confronts a reality where if you want diversity, you have to measure it, understand where and why it falls short, and take steps to fix it.

Is he even claiming that Google bends so far backwards for diversity that it damages the company’s ability to deliver products and attract great people, or just that it offends his sensibilities about how things should work? None of these abstract suggestions are going to make Google a better company.

Does he think it’s his job to determine Google’s values? Does he really think Larry Page and management are going to welcome criticism of their values as a constructive intervention, and it’s going to make Google a better place? Or is it just someone who lives in his own reality bubble with an inflated sense of his own importance, and/or thinks social media pot-stirring is normal in the workplace?

Lately it’s become acceptable to make anti-social statements against women, men, blacks, whomever. Some of the people who deride PC ‘snowflakes’ also generate a lot of outrage at any perceived slight, sometimes to the point of veiled threats. It’s a dangerous decline in norms of civilized behavior. We should be thinking carefully about who benefits, who is promoting it, and why, and how we defend freedom while at the same time defending ourselves against stupidity, and people who abuse their own freedom to take it away from others.